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The Institutions of U.S. Antitrust Enforcement: Comments for the U.S. House

Judiciary Committee on Possible Competition Policy Reforms

Alison Jones and William E. Kovacic*

April 17, 2020

I. Introduction

We are grateful for the opportunity to provide comments on the investigation by

the House Judiciary Committee (“the Committee”) into the state of competition in

the digital marketplace. We thank the Subcommittee on Antitrust, Commercial, and

Administrative Law, Chairman David N. Cicilline, and Ranking Member F. James

Sensenbrenner, Jr. for the invitation to offer our views.

As the Committee is aware, a large and expanding modern commentary recounts

a growing market power problem in the United States (especially in the information

technology sector) and dysfunction in its federal antitrust institutions.1 By failing to

protect competition, the federal antitrust enforcement agencies and the federal courts

are said to have damaged the economy severely. Commentators give several reasons

for the policy default: disregard of the egalitarian aims that motivated adoption of

the U.S. antitrust laws in favor of an efficiency-based goals framework;2 judicial

fidelity to outdated views of industrial organization economics;3 and enforcement

timidity rooted in the capture by potential prosecutorial targets of the federal

enforcement agencies, the Department of Justice (DOJ) and the Federal Trade

Commission (FTC).4

The critique sketched above has inspired active debate and intensified demands

for a fundamental redirection of antitrust policy and the application of other policy

instruments to increase competition. High on the proposed reform agenda is an

* Alison Jones, alison.jones@kcl.ac.uk, is a Professor of Law at King’s College London. William E Kovacic,

wkovacic@law.gwu.edu, is Professor of Global Competition Law and Policy at George Washington University,

Visiting Professor at King’s College London, and Non-Executive Director, United Kingdom Competition and Markets

Authority. The views expressed in these comments are the authors’ alone. Some material is adapted from Alison

Jones & William E. Kovacic, Antitrust’s Implementation Blind Side: Challenges to Major Expansion of U.S.

Competition Policy, 65 ANTITRUST BULL. (Forthcoming 2020), available at journals.sagepub.com. 1 See, e.g., Binyamin Applebaum, THE ECONOMISTS’ HOUR – HOW THE FALSE PROPHETS OF FREE MARKETS FRACTURED OUR SOCIETY (2019); Ariel Ezrachi & Maurice Stucke, COMPETITION OVERDOSE: HOW FREE MARKET

MYTHOLOGY TRANSFORMED US FROM CITIZEN KINGS TO MARKET SERVANTS (2020); Rana Foroohar, DON’T BE EVIL

– THE CASE AGAINST BIG TECH (2019); Thomas Philippon, THE GREAT REVERSAL – HOW AMERICA GAVE UP ON

FREE MARKETS (2019); Jonathan Tepper & Denise Hearn, THE MYTH OF CAPITALISM – MONOPOLIES AND THE DEATH

OF COMPETITION (2019); Matt Stoller, GOLIATH: THE 100-YEAR WAR BETWEEN MONOPOLY POWER AND DEMOCRACY

(2019); Tim Wu, THE CURSE OF BIGNESS – ANTITRUST IN THE GILDED AGE (2018). 2 See, e.g., Lina M. Khan, Amazon’s Antitrust Paradox, 126 YALE L. J. 710 (2017). 3 See, e.g., JONATHAN B. BAKER, THE ANTITRUST PARADIGM – RESTORING A COMPETITIVE ECONOMY (2019);

Collection: Unlocking Antitrust Enforcement, 127 YALE L.J. 1916 (2018). 4 See, e.g., PHILIPPON, supra note 1, at 153-75; TEPPER & HEARN, supra note 1, at 162-65.

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extension of policy to provide greater control of the practices of leading technology

companies (notably, Amazon, Apple, Facebook, and Google) and dominant firms in

other sectors such as agribusiness and pharmaceuticals.5

Although there are dramatically different views as to whether, and how exactly,

change should take place, many observers stress the urgent need for more vigorous

and aggressive enforcement of the antitrust laws, especially by the federal agencies.

For example, there are calls for the agencies: to police future mergers more strictly,

perhaps with bans or presumptions against certain mergers and to arrest exclusionary

conduct by dominant companies.6 Other suggested means of control include the

creation of a new regulatory authority – vested in the antitrust agencies or in a new

government body – with power to promulgate rules that, among other provisions,

would bar dominant firms from selling their own products on the platforms they

own.7 Another body of commentators proposes a “root and branch reconstruction”

that would apply the antitrust statutes to increase citizen welfare by, among other

means, accounting for the interests of workers, small and medium enterprises, and

local communities.8

In these comments, we do not debate the condition of competition in the U.S.

economy, nor do we assess the substantive merits of various measures proposed to

correct the market and policy deficiencies identified in modern debates. For the

most part, we do not address whether the substantive mandates embodied in the

antitrust statutes -- the Sherman Act,9 the Clayton Act (as amended by the Robinson-

Patman Act),10 and the Federal Trade Commission Act11 -- provide sufficient means

for public enforcement agencies and private plaintiffs to correct these deficiencies.

Instead, we focus on the third topic identified by the House Judiciary Committee in

its request for comments on its digital marketplace proceedings:

Whether the institutional structure of antitrust enforcement – including

the current levels of appropriations to the antitrust agencies, existing

agency authorities, congressional oversight of enforcement, and current

5 We summarize some of the principal reform proposals in Alison Jones & William E. Kovacic, Antitrust’s

Implementation Blind Side: Challenges to Major Expansion of U.S. Competition Policy, 65 ANTITRUST BULL.

(Forthcoming 2020), available at journals.sagepub.com. 6 A representative statement of recommendations for expanded enforcement appears in American Antitrust Institute,

The State of Antitrust Enforcement and Competition Policy in the U.S. (Apr. 14, 2020), available at

antitrustinstitute.org. 7 See, e.g., Stigler Center Committee on Digital Platforms, Digital Platforms, Final Report (2019) (proposal to

establish a new digital regulatory agency); United Kingdom Digital Competition Expert Panel, Unlocking Digital

Competition (Mar. 2019) (recommendation to create a new “digital unit”). 8 See, e.g., Sandeep Vaheesan, How Robert Bork Fathered the Gilded Age, Promarket Blog (Sept. 5, 2019) (“Antitrust

needs root and branch reconstruction.”), https://promarketblog.org/how-robert-bork-fathered-the-new-gilded-age/. 9 15 U.S.C. §§ 1-7. 10 15 U.S.C. §§ 12-27. 11 See especially 15 U.S.C. § 45 (declaring unfair methods of competition to be unlawful).

https://promarketblog.org/how-robert-bork-fathered-the-new-gilded-age/

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statutes and case law – is adequate to promote robust enforcement of the

antitrust laws.

Our principal concerns in these comments are the policy implementation challenges

that stand between ambitious reform aspirations and their effective realization in

practice. We take the various reform recommendations – presented in scholarly

papers, blue ribbon studies, popular essays, and presentations to this Committee – at

face value, and ask what needs to be done to land them successfully: how can an

effective program actually be delivered (for example, by winning antitrust cases)

and how can it be delivered well?

We applaud the Committee’s focus on issues of institutional design and policy

implementation. In our view, the modern debate about U.S. competition policy too

often overlooks these “implementation” issues and too quickly side-lines them as

technical details to be (easily) addressed once the high-level concepts of a bold

antitrust program have been settled. Implementation does not, however, simply sort

itself out once an expanded substantive policy agenda is set in place. One of us

(Kovacic) spent several years in private law practice working for an aerospace

industry client which had a major role in the U.S. space program in the 1960s. In

one conversation, an engineer with the company remarked that while the essential

physics of going to the moon was relatively straightforward, the engineering was

very difficult.

In competition law, the quality of the institutional framework is a key

determinant of policy success.12 Brilliant “physics” (a grand substantive vision)

joined up with weak engineering (deficient implementation) is a formula for failure.

From the creation of the U.S. federal antitrust system 130 years ago to the present,

inattention to implementation tasks has sometimes invited acute disappointment by

creating a chasm between elevated policy commitments and the ability of

competition agencies, regulators, and courts to produce expected outcomes. In

particular, the gap between policy commitments and system capabilities has been

evident in efforts to resolve the most vexing problem in the history of the U.S.

system: how to deal with dominant firms and oligopolies?13

Among other points, we propose measures that Congress can take to strengthen

antitrust’s implementing institutions. In our view, modern antitrust history suggests

there is a significant risk that, without such steps, a major reform program will

engage considerable resources, public and private, in initiatives that fall well short

of their goals. We urge the Committee to reflect upon earlier instances in which

12 The preeminent treatment of the link in the U.S. antirust system between institutional design and enforcement

performance is Daniel A. Crane, THE INSTITUTIONAL STRUCTURE OF ANTITRUST ENFORCEMENT (2011). 13 See William E. Kovacic, Failed Expectations: The Troubled Past and Uncertain Future of the Sherman Act as a

Tool for Deconcentration, 74 IOWA L. REV. 1105 (1989).

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demands for a dramatic expansion of public enforcement led the federal antitrust

agencies to undertake projects that exceeded the agencies’ ability to complete the

projects successfully. For example, in the 1960s and 1970s, various congressional

committees concluded that lax antitrust enforcement had contributed to dangerous

levels of industrial concentration. Congress pressed the DOJ and the FTC to

implement a bold program of cases to challenge dominant firms and oligopolies.

Such exhortations underestimated the difficulties that the agencies would encounter

in seeking to carry out a broad-based deconcentration litigation program.

The miscalculation of Congress (and the agencies) about the magnitude of

implementation tasks in this earlier period came at a high price. Implementation

weaknesses undermined many investigations and cases that the federal agencies

launched in response to congressional guidance.14 The litigation failures raised

questions about the competence of the federal agencies, particularly their ability to

manage large cases dealing with misconduct by dominant firms and oligopolists.

The wariness of the federal agencies since the late 1970s to bring cases in this area

– a wariness that many observers today criticize as unwarranted – is in major part

the residue of bitter litigation experiences from this earlier period.15

The U.S. experience from the late 1960s to the early 1980s of prosecuting of

lawsuits to deconcentrate American industry deserves the close attention of the

House Judiciary Committee and other congressional bodies in contemplating a new

program to challenge dominant firms and oligopolies. Instead of restoring

confidence in the ability of government agencies to enforce antitrust laws

effectively, a major new effort that fails to come to grip with longstanding, readily

identifiable implementation issues might reinforce doubts, and cynicism, about the

quality of public administration.

Our comments begin by identifying important impediments to effective delivery

of proposals to expand competition policy significantly. Against this backdrop, we

then discuss what it is likely to take to implement a program of more expansive

antitrust enforcement successfully, and suggest measures to ensure that reform

commitments properly account for the ability of the public agencies to execute the

commitments. The discussion includes consideration of how antitrust agencies

14 This history is recounted in William E. Kovacic, Competition Policy in the “Broadest Sense”: Michael Pertschuk’s

Chairmanship of the Federal Trade Commission 1977-1981, 60 WILLIAM & MARY L. REV. 1269 (2019) (hereinafter

Broadest Sense); William E. Kovacic & David A. Hyman, Consume or Invest: What Do/Should Agency Leaders

Maximize, 91 WASHINGTON L. REV. 295, 304-13 (2016) (hereinafter Consume or Invest); William E. Kovacic,

Congress and the Federal Trade Commission, 75 ANTITRUST L.J. 869 (1989) (hereinafter Congress and the FTC). 15 We offer no rigorous proof for this proposition. In the late 1970s and early 1980s, one of us (Kovacic) worked on

several of the FTC’s cases brought to challenge dominant firms and oligopolies and, as a senior official in the FTC in

the 2000s, saw how those experiences affected the agency’s culture and decision making.

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might undertake a more ambitious program with or without receiving new powers

or resources from Congress.

Three perspectives inform our analysis of the U.S. policy implementation

framework. First, we use experience in other jurisdictions to benchmark the U.S.

regime. The comparative point of view identifies important areas in which U.S.

system reforms could improve performance. Second, we draw upon historical

examples to identify important phenomena that affect the operation of the U.S.

regime. A historical view does not always provide ready answers to questions raised

by contemporary policy debates, but it offers a valuable basis for understanding why

the U.S. system has evolved as it has, and for anticipating challenges that an

expansion of existing enforcement programs likely will face. We draw parallels

between current debates and past ones, including those that influenced enhanced

antitrust enforcement (especially by the FTC) in the 1960s and early 1970s, and we

use historical examples to show what might happen if these hurdles are

underestimated or ignored in the formulation of bold new initiatives. Third, we apply

our own experience in the enforcement of competition laws in the United States and

abroad.

II. OBSTACLES TO EFFECTIVE IMPLEMENTATION

Many contemporary proposals for an expansion of U.S. antitrust enforcement

seem to be predicated on the assumption that a new, more aspiring program can be

driven home straightforwardly by agencies (a) led by courageous leaders and (b)

supported by a larger staff that shares the vision for fundamental change. Simply

stated, the chief requisites for successful implementation are said to be more guts

and more money.

To us, modern U.S. antitrust experience seems to indicate that more courage and

more people will not necessarily overcome the implementation obstacles that stand

in the way of prosecuting a large number of complex cases against well-resourced

and powerful companies. The criticisms leveled at the current system and the

proposals for more ambitious enforcement and reform, and the scale of the action

being demanded, bear some resemblance to those that led to more aggressive federal

antitrust enforcement in the late 1960s and early 1970s. In that period, Congress

endorsed the assessment of various commentators that the FTC was in decay,

obsessed with trivial cases, and indifferent to serious competitive problems arising

from economic concentration.16 Congress demanded that the FTC undertake

16 See Edward F Cox et al, THE NADER REPORT ON THE FEDERAL TRADE COMMISSION (1969) and the American Bar

Association, Report of the ABA Commission to Study the Federal Trade Commission (1969).

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sweeping reforms or face extinction.17 To defeat criticisms that it was a shambolic

and failed institution, the FTC embarked on a bold and astoundingly ambitious

enforcement program.18

The Congress and the FTC were not oblivious to the need to carry out

institutional improvements to carry out the new agenda. Congress raised the

agency’s budget and strengthened its remedial tools.19 The FTC sought to upgrade

its processes for policy planning, made concerted efforts to improve its human

capital in management and case-handling, and sought to improve substantive

processes and the quality of its competition and consumer protection analysis.20 In

the end, the congressional increases in budget and authority and the FTC’s own

efforts to improve its organization, management, and staff proved insufficient to

support the expanded enforcement agenda.

Perhaps more than any other source of failure, the FTC did not grasp, or devise

strategies to deal with, the scale and intricacies of its expanded program of cases and

consumer protection trade regulation rules, the ferocious opposition that big cases

with huge remedial stakes would provoke from large defendants seeking to avoid

divestitures, compulsory licensing, or other measures striking at the heart of their

business, and the resources required to deliver good results. In the end, it became

clear that the FTC was unable to manage novel shared monopoly cases that sought

the break-up of the country’s eight leading petroleum refiners and four leading

breakfast cereal manufacturers21 at the same time as pursuing numerous other high

stakes, difficult matters involving monopolization, distribution practices, and

horizontal collaboration. It also overlooked swelling political opposition, generated

by the vigorous business lobbying of Congress, that its aggressive program of

antitrust litigation and consumer protection rulemaking provoked.22

New legislation envisaged by reform advocates could ease the path for current

government agencies seeking to reduce excessive levels of industrial concentration;

Congress could alter legal standards in ways that facilitate enforcement agency cases

that attack anticompetitive behavior of dominant enterprises (through interim and

17 The external critiques of the FTC and congressional agreement with their principal findings are examined in David

A. Hyman & William E. Kovacic, Can’t Anyone Here Play This Game? Judging the FTC’s Critics, 83 GEO. WASH.

L. REV. 1948 (2015) (hereinafter FTC’s Critics). 18 Hyman & Kovacic, FTC’s Critics, supra note 17, at 1965-67; Kovacic, Broadest Sense, supra note 14, at 1282-91. 19 See William E. Kovacic, The Federal Trade Commission and Congressional Oversight of Antitrust Enforcement,

17 TULSA L.J. 589, 632-43, 654-59 (1982) (hereinafter Congressional Oversight) 20 Kovacic, Broadest Sense, supra note 14, at 1291-92. 21 In re Kellogg Co., 99 F.T.C. 8, 8-16 (1982) (describing the FTC’s administrative complaint filed in 1972); In re

Exxon Corp., 98 F.T.C. 453, 454-59 (1981) (describing FTC’s administrative complaint filed in 1973). 22 See Kovacic, Broadest Sense, supra note 14, at 1316-17; William E Kovacic and Marc Winerman, Competition

Policy and the Application of Section 5 of the Federal Trade Commission Act, 76 ANTITRUST L.J. 929 (2010)

(hereinafter Section 5).

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permanent relief) and seek to block mergers that pose incipient threats to

competition. The path to major legislative reforms in antitrust or in any other field

is, however, uncertain.23 One expects that major amendments to the existing antitrust

statutes will be contested fiercely through the legislative process. New laws will

take time, and be difficult, to enact. Further, even if armed with a more powerful

mandate, the DOJ and the FTC will still have to bring what are likely to be

challenging cases applying the new laws. The adoption, setting up, and bedding in

of new legislation or regulatory structures and bodies are unlikely to happen quickly.

These difficulties suggest that for the near future, at least, the agencies will have to

achieve successful extensions of policy mainly through the prosecution of cases

within the existing statutory framework.

The discussion in this section identifies some core factors that are likely to

impede implementation of ambitious reforms, either through litigation (under the

present-day regime) or legislation, unless Congress and the enforcement agencies

develop a strategy to overcome them. These include judicial resistance to broader

applications of the Sherman, Clayton, and FTC Acts, the complexities of designing

effective remedies, the uncertainty of long-term political support for ambitious

reforms, the possibilities for political backlash once agencies begin prosecuting

major new cases, and the complications, and resistance, that confronts any effort in

the United States to make legislative change.

A. Judicial Resistance to Extensions of Existing Antitrust Doctrine

In the U.S. antitrust system, judges have played an extraordinarily influential

role in their interpretations of the antitrust statutes.24 Since the late 1970s, judicial

decisions have reshaped antitrust law by creating more permissive substantive

standards governing dominant firm conduct, mergers, and vertical restraints and

raising the pleading and evidentiary standards that plaintiffs must satisfy to sustain

cases and obtain relief.25

An expansion of public antitrust enforcement will depend, in the short term at

least, upon the skill of government agencies in navigating existing jurisprudence to

establish an antitrust infringement and, in some instances, in persuading courts to

soften, modify, or even reverse elements of current case law. Although such an

23 See, e.g., William E. Kovacic, HSR at 35: The Early US Premerger Notification Experience and Its Meaning for

New Systems of Competition Law, in NEW COMPETITION JURISDICTIONS 9 (Richard Whish & Christopher Townley

eds., 2012) (describing process that led to enactment of the Hart-Scott-Rodino Antitrust Improvements Act of 1976).

From 1975-76, one of us (Kovacic) served as a research assistant on the majority staff of the Senate Judiciary

Subcommittee on Antitrust and Monopoly during deliberations on the Hart-Scott-Rodino Act. 24 The breadth of this role as exercised by federal judges is analyzed in Daniel A. Crane, Antitrust Antitextualism (Mar.

2020), available at papers.ssrn.com/so13/papers.cfm?abstract_id=3561870##. 25 See Andrew I. Gavil et al., ANTITRUST LAW IN PERSPECTIVE – CASES, CONCEPTS AND PROBLEMS IN COMPETITION

POLICY 437-45, 679-80, 880-90, 902-51 (3d ed. 2017).

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evolution could in theory take place, as it has done over the last forty years, in a new

stream of antitrust cases, judicial appointments since 2017 arguably have made such

a change in direction unlikely. Rather, it seems more probable that successful

prosecution of major antitrust (especially Section 2 Sherman Act) monopolization

cases will remain challenging and may even become more difficult. Cases will be

litigated before judges who are ordinarily predisposed to accept the current

framework, either by personal preference or by a felt compulsion to abide by forty

years of jurisprudence that tells them to do so. A new president could gradually

change the philosophy of the federal courts by appointing judges sympathetic to the

aims of the proposed transformation. The reorientation of the courts through judicial

appointments is, however, likely to take a long time.

Until then, judges in the district courts and the courts of appeals will be

constrained by the existing jurisprudence and will only be at liberty to develop a

more flexible approach by working in the “gaps” or spaces left by Supreme Court

opinions and through creative interpretations of the law. Such cases are likely to be

hard fought. For example, Judge Lucy Koh’s finding in Federal Trade Commission

v. Qualcomm, Inc.26 that Qualcomm’s licensing practices constituted unlawful

monopolization of the market for certain telecommunications chips has provoked

hostile attacks, not only from practitioners and academics but from the DOJ, the U.S.

Departments of Defense and Energy, and even one of the FTC’s own members.27

This is the most important government Section 2 case in the courts today, and the

FTC faces a daunting challenge to gain appellate approval, including a possible

review by the Supreme Court, for its victory at trial.

B. Infirmities of Section 5 of the Federal Trade Commission Act

One possible solution to rigidities that have developed in Sherman Act

jurisprudence is for the FTC to rely more heavily on the prosecution, through its own

administrative process, of cases based on Section 5 of the FTC Act, which prohibits

“unfair methods of competition.”28 It is well-established that Section 5 authorizes

the FTC to tackle not only anticompetitive practices prohibited by the other antitrust

statutes, but also conduct constituting incipient violations of those statutes or

behaviour that exceeds their reach, for example, where the conduct does not infringe

26 No. 17-cv-00220 (N.D. Cal. Jan. 17, 2017), https://www.ftc.gov/enforcement/casesproceedings/141-

0199/qualcomm-inc. 27 Christine Wilson, A Court’s Dangerous Antitrust Overreach WALL ST. J. (May 28, 2019),

https://www.wsj.com/articles/a-courts-dangerous-antitrust-overreach-11559085055. 28 15 U.S.C. § 45(a).

https://www.wsj.com/articles/a-courts-dangerous-antitrust-overreach-11559085055

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the letter of the antitrust laws but contradicts their basic spirit or norms developed in

other areas of public policy.29

Congress designed Section 5 to be an expansion joint in the U.S. antitrust system.

Realizing this potential in practice has proven elusive. The FTC’s efforts to use

Section 5 for what Professor Daniel Crane has called “norms creation”30 have

encountered immense difficulties. Since its creation in 1914, the FTC has never

prevailed before the Supreme Court in any case challenging dominant firm

misconduct, whether premised on Section 2 of the Sherman Act or purely on Section

5 of the FTC Act.31 The last FTC success in federal court in any competition case

predicated solely on Section 5 occurred in the late 1960s.32

The FTC’s record of limited success with Section 5 has not been for want of

trying. In the 1970s, the FTC undertook an ambitious program to make the

enforcement of claims predicated on the distinctive reach of Section 5 a foundation

to develop “competition policy in its broadest sense.”33 The agency’s Section 5

agenda yielded some successes,34 but also a large number of litigation failures in

cases to address subtle forms of coordination in oligopolies, to impose new

obligations on dominant firms, and to dissolve shared monopolies.35 The agency’s

program elicited powerful legislative backlash from a Congress that once supported

the FTC’s trailblazing initiatives but turned against it as the Commission’s efforts to

obtain dramatic structural remedies unfolded.36

C. Designing Effective Remedies

Important issues arising for the new enforcement strategy proposed will be what

remedies should be sought, how can an order, or decree, be fashioned to ensure that

the violation is terminated, that competition on the market is restored, the

opportunity for competition is re-established, and that future violations are not

29 See FTC v Brown Shoe Co 384 U.S. 316, 322 (1966) (the Commission has power under section 5 to arrest trade

restraints in their incipiency without proof that they amount to an outright violation of section 3 of the Clayton Act or

other provisions of the antitrust laws), FTC. v Motion Picture Adv. Co., 344 U.S. 392, 394-395, FTC v Sperry &

Hutchinson Co 405 U.S. 233, 239 (1972) (section 5 empowers the Commission to define and proscribe an unfair

competitive practice, even though the practice does not infringe either the letter or the spirit of the antitrust laws) and

Neil W Averitt, The Meaning of “Unfair Methods of Competition” in Section 5 of the Federal Trade Commission Act

21 B.C. L. REV. 227 (1980). 30 Crane, supra note 12. 31 See Kovacic & Winerman, supra note 23. 32 Id. 33 See Kovacic, Broadest Sense, supra note 14, at 1286-87. 34 In re Xerox, 86 F.T.C. 364 (1975) (consent order). 35 The most notable litigation setbacks were the FTC’s shared monopoly cases against the leading U.S. breakfast cereal

manufactures and the eight largest petroleum refiners, Kellogg Co 99 F.T.C. 8 (1982) and Exxon Corp., 98 F.T.C. 453

(1981) 36 See William E. Kovacic, Creating a Respected Brand: How. Regulatory Agencies Signal Quality, 22 GEO. MASON

L. REV. 237, 241 (2015); Kovacic, Congressional Oversight, supra note 20, at 665.

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committed and deterred; and will a court be likely to impose any such remedy.

Reform advocates have called for the bold application of the full range of possible

civil antitrust remedies, including unwinding past mergers, divestment of assets,

restructuring concentrated markets, limiting vertical integration, imposing access

and nondiscrimination obligations, requiring the licensing of intellectual property,

and disgorging revenues gained from improper conduct.

In this vision of enforcement, structural remedies play a crucial role in

deconcentrating both monopolistic and oligopolistic markets, rapidly introducing

new competition into a market, and reversing what they consider to be the severe

structural problems that had developed.37 A number of factors have discouraged

extensive recourse to structural relief in nonmerger cases. First, some scholars have

raised concerns about the effectiveness of previous attempts to deconcentrate

industries,38 especially given the length of time that antitrust proceedings take.39

Second, courts sometimes have been daunted the difficulty involved in constructing

and overseeing a structural remedy effectively. The question of how and what to

divest (e.g., how to separate physical facilities and allocate staff from integrated

teams) can be intimidating.40 These types of concerns may lead a court to demand a

strong showing that a structural remedy is warranted and will be successful in

achieving its objective.

A special problem in highly dynamic markets is that the lag between the

initiation of a case and a final order on relief may be so great that market

circumstances have changed dramatically and the victim of allegedly improper

exclusion may have left the market or otherwise lost its opportunity to expand and

contest the position of the incumbent dominant firm. In this context, the antitrust

cure arrives far too late to protect competition. The relatively slow pace of antitrust

investigations and litigation (with appeals that follow an initial decision) has led

some observers to doubt the efficacy of antitrust cases as effective policy making

tools in dynamic commercial sectors.

There are at least five possible responses to concerns about the speed of antitrust

litigation, particularly matters involving dominant firms. First, agencies could

37 See William E. Kovacic, Designing Antitrust Remedies for Dominant Firm Misconduct, 31 U. CONN. L. REV. 1285

(1999) (hereinafter Designing Antitrust Remedies). 38 See e.g., Robert W. Crandall, The Failure of Structural Remedies in Sherman Act Monopolization Cases, 80 OR. L.

REV. 109 (2001); Walter Adams, Dissolution, Divorcement, Divestiture: The Pyrrhic Victories of Antitrust 27 IND.

L.J. 1 (1951). 39 The evolution in the market situation since the time the proceedings were launched can make the remedy orginally

sought inappropriate. See Richard A Posner, ANTITRUST LAW 106 (2d ed, 2001). 40 See United States v. United Shoe Mach. Corp., 110 F.Supp 295, 348 (D. Mass 1953) (Judge Wyzanski: “United

conducts all machine manufacture at one plant in Beverly, with one set of jigs and tolls, one foundry, one laboratory

for machinery problems, one managerial staff, and one labor force. It takes no Solomon to see that this organism

cannot be cut into three equal and viable parts.”)

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experiment with ways to accelerate investigations, and courts could adopt innovative

techniques to shorten the length of trials. In the United States, we perceive that

greater integration of effort among the public agencies would permit the more rapid

completion of investigations (e.g., by pooling knowledge and focusing more

resources on the collection and evaluation of evidence). Courts could use methods

tested with success in the DOJ prosecution of Microsoft for illegal monopolization

in the late 1990s to truncate the presentation of evidence.41 These types of measures

have some promise to bring matters to a close more quickly.

Second, the initiation of a lawsuit could be recognised as being, in some

important ways, its own remedy; the prosecution of a case by itself causes the firm

to change its behavior in ways that gives rivals more breathing room to grow.

Moreover, the visible presence of the enforcement authority, manifest by its

investigations and lawsuits, causes other firms to reconsider tactics that arguably

violate the law. Seen in this light, the entry of a final order that specifies remedies

may not be necessary in all instances to have the desired chastening effect.

A third response is to experiment more broadly with interim relief that seeks to

suspend certain types of exclusionary conduct pending the completion of the full

trial.42 Effective interim measures would require the enforcement agency to develop

a base of knowledge about the sector that enables it to accurately identify the

practices to be enjoined on an interim basis and to give judges a confident basis for

intervening in this manner.

A fourth approach would be that the remedies achieved in protracted antitrust

litigation may not be so imperfect or untimely as they might appear to be. There

have been a number of instances in which the remedy achieved in a monopolization

case was rebuked as desperately insufficient when ordered but turned out to have

positive competitive consequences.43 This is a humbling and difficult aspect of

policy making. It may not be easy for an agency to persuade its political overseers

– or other external audiences – that the chief benefits of its intervention will emerge

in, say, two or three decades. Yet the positive results may take a long time to become

apparent.

A fifth technique would be to rely more heavily on ex ante regulation in the form

of trade regulation rules that forbid certain practices. A competition authority – most

41 See Andrew I. Gavil & Harry First, THE MICROSOFT ANTITRUST CASES: COMPETITION POLICY FOR THE TWENTY-

FIRST CENTURY (2014). 42 And so to halt potentially anti-competitive conduct pending investigation. On October 16, 2019, the European

Commission used such powers for the first time in eighteen years in proceedings against Broadcom. See

https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_19_6115). 43 Two cases we would include in this category are the breakup of the Standard Oil trust mandated in Standard Oil

Co. of New Jersey v. United States, 221 U.S. 1 (1911) and the patent licensing remedies accepted by settlement in

United States v. Western Elec. Co., 1956 Trade Reg. Cas. (CCH) ¶ 68,246 (D.N.J.1956) (consent decree).

https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_19_6115

12

likely the FTC – would use its rulemaking powers to proscribe specific types of

conduct (e.g., self-preferencing by dominant information services platforms).

In these comments, we do not purport to solve the problems of remedial design

set out above. There is, however, a fairly clear conclusion about how enforcement

agencies should go about thinking of remedies. As we note below, there is

considerable room for public agencies to design remedies more effectively by

systematically examining past experience and collaborating with external

researchers to identify superior techniques. In this regard, the FTC’s collection of

policy tools would appear to make it the ideal focal point for the development of

more effective approaches to remedial design.

E. Political Backlash

The government’s prosecution of high stakes antitrust cases often inspires

defendants to lobby elected officials to rein in the enforcement agency. Targets of

cases that seek to impose powerful remedies have several possible paths to

encourage politicians to blunt enforcement measures. One path is to seek

intervention from the President. The Assistant Attorney General of the Antitrust

Division serves at the will of the President, making DOJ policy dependent on the

President’s continuing support. The White House ordinarily does not guide the

Antitrust Division’s selection of cases, but there have been instances in which the

President pressured the Division to alter course on behalf of a defendant, and did so

successfully.44

The second path is to lobby the Congress. The FTC is called an “independent”

regulatory agency, but legislators believe independence means insulation from the

executive branch, not from the Congress.45 The FTC is dependent on a good

relationship with Congress, which controls its budget and can react with hostility,

and forcefully, when it disapproves of FTC litigation – particularly where the

Commission’s cases adversely affect the interests of members’ constituents.

Controversial and contested cases may be derailed or muted if political support

for them wanes and politicians become more sympathetic to commercial interests.

The FTC’s sometimes tempestuous relationship with Congress demonstrates that

political coalitions favoring bold enforcement can be volatile, unpredictable, and

evanescent.46

44 On the influence on White House involvement in decision making in antitrust cases at DOJ, see James F. Rill &

Stacey L. Turner, Presidents Practicing Antitrust: Where to Draw the Line? 79 ANTITRUST L.J. 577 (2014). 45 See William E. Kovacic & Marc Winerman, The Federal Trade Commission as an Independent Agency: Autonomy,

Legitimacy, and Effectiveness 100 IOWA L. REV. 2085 (2015) (hereinafter Independent Agency). 46 See Kovacic, Congress and the Federal Trade Commission, supra note 14.

13

Imagine, for a moment, that the DOJ and the FTC launch monopolization cases

against each of the most carefully examined technology giants: Amazon, Apple,

Facebook, and Google. These firms have received unfavorable scrutiny from

legislators of both political parties in recent years, but the current wave of political

opprobrium is unlikely to discourage the firms from bringing their formidable

lobbying resources to bear upon the Congress.

It would be hazardous for the enforcement agencies to assume that a sustained,

well-financed lobbying campaign will be ineffective. At a minimum, the agencies

would need to consider how many battles they can fight at one time, and how to

foster a countervailing coalition of business interests or consumer bodies to oppose

the defendants.

F. Opposition to Legislative Reform

Although statutory reform might at first sight appear to be a direct, effective

solution to some of the impediments (such as entrenched judicial resistance to

intervention), there are good reasons to expect that powerful business interests will

also stoutly oppose any proposals for legislation to expand the reach of the antitrust

laws, or to create a new digital regulator.

One can envisage the formidable financial and political resources that the

affected firms will amass to stymie far-reaching legislative reforms. Legislative

steps that threaten the structure, operations, and profitability of the Tech Giants and

other leading firms are fraught with political risk.47 These risks are surmountable,

but only by means of a clever strategy that anticipates and blunts political pressure.

One element of such a strategy is to mobilize countervailing support from consumer

and business interests to sustain an enabling political environment to enact ambitious

new laws.

Even if successful, legislation to override existing jurisprudential limitations

might take years to accomplish; cases taken under new legislation – even with the

establishment of presumptions that improve the litigation position of government

plaintiffs – may still be relatively complex and difficult to prosecute. Rulemaking is

an alternative to litigation, but it is no easy way out of the problem. On the contrary,

promulgation and defense (in litigation) of a major trade regulation rule may take as

long as the prosecution of a Section 2 case. It can also be anticipated that a judiciary

populated with many regulation skeptics will subject new rules or related measures

to demanding scrutiny.

47 To be clear, the political attacks can come, and have come, from both political parties.

14

III. INSTITUTIONAL REFORMS TO ENABLE IMPLEMENTATION

A. Finding a Path

Two major factors that shape an agency’s performance are its capacity and its

capability.48 “Capacity” refers to the agency’s human talent and the resources (such

as its informational technology infrastructure) that supports its personnel in carrying

out their duties. “Capability” refers to whether the agency has the statutory powers

(e.g., tools to remedy infringements), organizational structure, and processes (e.g.,

quality control mechanisms) needed to make sound decisions and implement

programs successfully.

In competition law, the Congress and the federal enforcement agencies share

responsibility for determining the capacity and the capability of the DOJ and the

FTC. Congress affects the agencies’ capacity mainly in making appropriations and,

as emphasized below in Section B, in setting compensation levels for agency

personnel. The agencies also affect capacity by deciding how much to invest in

training personnel and in increasing the base of knowledge the agency can draw

upon in developing cases and non-litigation projects. The investment in “policy

research and development”49 – for example, in conducting ex post assessments of

the impact of past decisions -- can strengthen an agency’s skill in selecting good

projects and running them well. The sustained investment in policy R&D is essential

if the agency is to be truly proficient in addressing issues that arise in dynamic high

technology markets.50

Capability also is the product of choices made by Congress and the enforcement

agencies. Congress approves the statutory framework and the body of administrative

rules that govern how the agencies operate. To a significant degree, Congress also

controls how the agencies are organized. At the same time, the agencies have

considerable discretion to devise methods for setting priorities and choosing projects

to carry out the priorities. Agencies that share policy duties with other public bodies

48 The framework used here is derived from David A. Hyman & William E. Kovacic, Why Who Does What Matters:

Government Design and Agency Performance, 82 GEO. WASH. L. REV. 1446, 1474-76 (2014). 49 During his chairmanship of the FTC, Timothy Muris used this expression to underscore how the FTC’s success

depended substantially on its ability to accumulate knowledge (e.g., through a study), retain lessons used from past

experience, and apply its knowledge to new projects. The ability to produce useful “products” in the form of cases

and rules required continuing, substantial outlays for research. Timothy J. Muris, Looking Forward: The Federal

Trade Commission and the Future Development of Competition Policy, 2003 COLUM. BUS. L. REV. 359 (2003). 50 The need to make significant investments in developing knowledge is greatest in sectors, such as information

technology, that feature high levels of dynamism. Without the investment, an antitrust agency loses its ability to

understand the markets it oversees, to make an accurate diagnosis of commercial developments, and to intervene

effectively to correct observed problems. See Andrew I. Gavil, The FTC’s Study and Advocacy Authority in Its Second

Century: A Look Ahead, 83 GEO. WASH. L. REV. 1902, 1905-07 (2015).

15

(which is the case in antitrust law for the DOJ, the FTC, and the state attorneys

general) must decide how to cooperate in the common policy domain.

In the discussion below, we offer suggestions about how Congress and the

agencies can improve the capacity and capability of federal antitrust enforcement.

Successful accomplishment and delivery of reforms, more moderate and more

ambitious, alike, will require the awareness and realistic assessment of likely

implementation obstacles and a conscious effort to develop a strategy to surmount

them. As mentioned above, history provides sobering examples of failures where

similar, significant implementation barriers have not been considered or have been

discounted.51 Such barriers are not a formula for timidity or a reason to forego

change. Rather, understanding them helps guide the design of a successful program.

To return to our U.S. space program analogy,52 an indispensable foundation for the

ultimate success of the Apollo program was the commitment of NASA and its

contractors to understand the full magnitude of the task before them and to anticipate

all hazards that confront human spaceflight to and from the Moon’s surface.53 The

probing analysis of risks inspired successful efforts to find solutions. Operating in

an unforgiving environment where even small errors could be catastrophic, humans

landed on the Moon and returned safely to Earth.

The discussion below considers approaches for navigating the reform

implementation challenges set out in Section II. Our most important caution is that

the reforms – more dramatic and less sweeping – will require substantial upgrades

in the capacity and capabilities the institutions responsible for implementation. The

more ambitious the reform, the more urgent is the need for enhancements.

Further, the prospects of success for the public agencies (federal and state) are

likely to improve if the government institutions can formulate a common strategy to

overcome identified obstacles. Doing so will demand planned, joined-up, and

collaborative enforcement by the public enforcement agencies and a forthright self-

assessment of existing operations and capabilities – to repair institutional flaws, to

temper interagency disagreements, and to assemble the human capital needed to run

a new, large collection of difficult antitrust suits.

B. Strengthening Capacity: Augmenting DOJ and FTC Human Capital

Measures to expand federal antitrust intervention dramatically – through the

prosecution of lawsuits or the promulgation of trade regulation rules – will face

arduous opposition from the affected businesses. Assuming that litigation will

51 See supra Introduction to Section II. 52 See supra Section I. 53 This experience is recounted in Charles Fishman, ONE GIANT LEAP – THE IMPOSSIBLE MISSION THAT FLEW US TO

THE MOON (2019).

16

provide the main method in the coming few years to attack positions of single-firm

or collective dominance, the targets of big antitrust cases will marshal the best talent

that private law firms, economic consultancies, and academic bodies can offer to

oppose the government in court. The defense will benefit from doctrinal principles

that generally are sympathetic to dominant firms (we assume that legislation to

change the doctrinal status quo may not be immediately forthcoming).

Beyond a certain point, the addition of new, high stakes cases to the litigation

portfolio of public antitrust agencies can create a serious gap between the teams

assembled for the prosecution and defense, respectively. Although the public

agencies can match the private sector punch for punch when prosecuting several

major de-monopolization cases, when the volume of such cases rises from several

to many, the government agencies may have to rely on personnel with considerably

less experience to develop and prosecute difficult antitrust cases seeking to impose

powerful remedies upon global giants.

An enhanced litigation program therefore will go only as far as the talent of the

agencies will carry it. We propose three steps to build and retain the human capital

– attorneys, economists, technologists, and administrative managers – to undertake

a more ambitious litigation program. The first is to use antitrust as a prototype for a

program to raise civil service salaries. The second two steps consist of cautions

about the dangers of (a) denigrating the skills and accomplishments of existing

agency personnel, and (b) attempting to shut the revolving door through which

professionals now move between the public and private sectors. We discuss all three

of these steps below.

(i) Resources and Compensation. To accomplish the desired expansion of

enforcement, we see a need for more resources, but not simply to build a larger staff

by hiring more people. It is also to attract and retain a larger number of elite

personnel who are equal to the tasks that the ambitious reform agenda will impose.

We would use an increase in resources mainly to boost compensation, which means

taking the antitrust agencies out of the existing civil service pay scale. We do not see

how the public agencies can recruit and retain necessary personnel without a

significant increase in the salaries paid to case handlers and to senior managers. It

surprises us that adequate compensation for civil servants is not a focus of attention

in contemporary proposals for an expansion of antitrust enforcement, including new

cases to take on the leading firms in the high technology industry and in other

sectors.

Consider two possibilities for compensation reform. The first is to align antitrust

salaries to the highest scale paid to the various U.S. financial service regulators. Here

the model would be the compensation paid to employees of the banking regulatory

17

agencies; the salary scale for these bodies exceeds the General Schedule (GS) federal

civil service wage scale by roughly twenty percent.54 In adopting the Dodd-Frank

Wall Street Reform and Consumer Protection Act in 2010,55 Congress concluded

that the importance of the mission of the new Consumer Financial Protection Bureau

(CFPB) warranted higher salaries for the agency’s personnel. If the higher salary

scale made sense for the CFPB, we see no good reason why a more generous

compensation schedule is not appropriate for the antitrust enforcement agencies.56

Are the duties entrusted to the federal antitrust agencies any less significant? Are

the economic problems that the DOJ and the FTC (which is also the principal federal

consumer protection agency and privacy regulator) are being called on to address –

in the proceedings of this Committee and in many other fora -- any less significant?

If the answers to these questions is “no,” Congress should allow the antitrust

agencies to pay at least the same wages as the CFPB does.

Our second alternative requires a more dramatic change, which we would

implement in the first instance at the FTC.57 We would triple the FTC’s existing

budget of about $330 million per year and use the increase mainly to raise salaries

and partly to add more employees. This experiment might be carried out for a decade

to test whether a major hike in pay would increase the agency’s ability to recruit the

best talent, retain the talent for a significant time, and apply that talent with greater

success in a program that involves prosecuting numerous ambitious cases and

devising other significant policy initiatives.

We see a major increase in compensation, either by adopting the CFPB model

or trying our more dramatic alternative, to be a crucial test of the commitment and

sincerity of elected officials who say a major expansion of antitrust enforcement is

necessary to correct grave market power problems involving digital platforms. If

fundamental competition policy reforms are vital to the nation’s well-being, then the

country should spend what it takes to get the best possible personnel to run the

difficult cases (and carry out other measures, such as the promulgation of trade

54 See Paul H. Kupiec, The Money in Banking: Comparing Salaries of Bank and Bank Regulatory Employees

(American Enterprise Institute, April 2014), https://www.aei.org/wp-content/uploads/2014/04/-the-money-in-

banking-comparing-salaries-of-bank-and-banking-regulatory-employees_17170372690.pdf. 55 Pub. L. No. 111-203, 124 Stat. 1376 (2010). 56 As a member of the FTC, one of us (Kovacic) observed firsthand how the disparity in salaries between the CFPB

and the FTC resulted in a significant migration after 2010 of the Commission’s elite consumer protection attorneys

and economists to the CFPB. Many of these individuals were major contributors to the FTC’s consumer protection

programs because they combined outstanding intellectual skills with decades of experience (much of it in middle-

level and senior management positions) at the Commission. It was impossible to replace them with individuals of

comparable skill and experience, and the FTC’s performance suffered as a consequence. 57 We suggest trying the reform suggested here first at FTC, which is a smaller, standalone agency. The DOJ Antitrust

Division is a relatively small part of a large bureaucracy. Singling out the Antitrust Division for the compensation

increases we propose here could create great friction with the Justice Department’s other operating units. Using the

FTC as a prototype would not generate such intra-agency tensions.

https://www.aei.org/wp-content/uploads/2014/04/-the-money-in-banking-comparing-salaries-of-bank-and-banking-regulatory-employees_17170372690.pdfhttps://www.aei.org/wp-content/uploads/2014/04/-the-money-in-banking-comparing-salaries-of-bank-and-banking-regulatory-employees_17170372690.pdf

18

regulation rules) that will be the pillars of a new, expanded enforcement program.

Such steps will become even more important if new political leadership seeks to

close the revolving door, which has operated as a mechanism to encourage attorneys

and economists to accept lower salaries in federal service in the expectation of

receiving much higher compensation in the private sector at a later time.

In considering these proposals, legislators should take no comfort in the idea that

the sense of satisfaction that can come from serving noble goals in public service

creates a sufficient inducement for the best personnel to come to the DOJ, the FTC,

or other federal agencies and stay there, notwithstanding the huge disparity in

salaries between civil servants and their private sector counterparts. From personal

experience working inside public institutions58 and studying their operations as

academics, we are convinced that civil servants in the United States and in many

other countries derive genuine “psychic income” from their work, and this reward

offsets, to some degree, the wage disparities with the private sector. In the United

States, the psychic income for civil servants at the DOJ and the FTC is evaporating

quickly. In articles, books, blog posts, press releases, and tweets, a large body of

commentators (including elected officials) today depict the federal antitrust agencies

as “useless” and portray their activities as “toothless,” or worse.59 Who would aspire

to join, or remain at, such institutions?60

A dramatic expansion of enforcement could create a temporary buzz of

excitement that draws first-rate talent into the agency, but only for a time. As

experience at the DOJ and the FTC in the 1970s shows, the excitement wears off

after a few years as attorneys and economists, facing relentless opposition from

better-resourced teams acting for defendants, leave the agencies for other jobs. Over

time, there is no getting around the need to compensate civil servants properly in the

58 One of us (Kovacic) has spent a total of almost twelve years in various capacities with the FTC and has been a Non-

Executive Director with the United Kingdom’s Competition & Markets Authority since 2014. 59 The critiques are often vituperative and personal. Consider one example. In a scalding assessment of modern federal

antitrust enforcement, a highly lauded volume states that “[t]he process of merger reviews is a scene where lawyers

and economists argue with future colleagues in a revolving door of money and influence peddling.” Tepper & Hearn,

supra note 1, at 164. The authors add that “the Department of Justice now essentially works to serve the interests of

companies.” Id. at 162. They also observe:

Dozens of industries are so egregiously concentrated that it begs the question as to what the authorities are doing

with their time. We don’t know. We know for a fact that workers at the Securities and Exchange Commission

spent their time watching porn while the economy crashed during the Financial Crisis. We would hate to

speculate about the Department of Justice and Federal Trade Commission.

Id. at 116. There is no glory or psychic income for DOJ or FTC employees in an environment in which such

commentary is commonplace. 60 Readers who review blog posts and tweets will discover that the opprobrium lands on senior managers and case

handlers, alike. In the modern style of criticism, commentators sometimes name and denounce the stokers who fuel

the boilers in the engine room in addition to attacking the judgment and motives of the officers on the bridge of the

ship.

19

paycheck, and not with appeals to patriotic spirit, if they are to persevere in

conducting arduous cases, rules, or studies.

(ii) Respecting and Learning from Past Achievements. In the United States, there

is an unfortunate habit of making the case for major reforms by depicting the existing

policy making institutions as utterly incompetent, slothful, or corrupt.61 Reform

advocates sometimes appear to believe that any recognition that existing institutions

sometimes have done good work undermines the case for fundamental reform. There

is a perceived imperative to portray the responsible bodies and their leaders as

hopelessly inadequate. Electoral campaigns can sharpen this tendency by leading the

opposition party to claim that the incumbent administration’s program was an

unrelieved failure.

In a striking number of instances, this pattern has emerged in discussions of

antitrust policy.62 In current discussions about the future of the U.S. antitrust regime,

advocates of fundamental reform sometimes portray the federal antitrust

enforcement agencies as decrepit -- perhaps to underscore the need for basic

change.63 The implication is that, because the antitrust system has failed so

miserably, there are few, if any, positive lessons to be derived from experience since

the retrenchment of U.S. policy began in the late 1970s, and certainly none since

2000.

This style of argument has several potential costs. One danger is that it overlooks

genuine accomplishments and, in doing so, ignores experience that suggests how to

build successful programs in the future. We offer three examples that deserve close

study in building future cases that seek to expand the reach of the antitrust system.

The first is the development of the FTC’s pharmaceutical and non-pharmaceutical

health care program from the mid-1970s forward. The Commission identified health

care as a major priority and devised a strategy that used the full range of the agency’s

policy tools – cases, rules, reports, and advocacy – to change doctrine and alter

business behavior.64 The affected business enterprises were (and are) economically

powerful and politically influential, and they mounted powerful campaigns in the

courts and in the Congress to blunt the Commission’s initiatives.

61 See William E. Kovacic, Politics and Partisanship in U.S. Federal Antitrust Policy, 79 ANTITRUST L. J. 687, 692-

704 (2014). 62 See, e.g., William E. Kovacic, Out of Control? Robert Bork’s Portrayal of the U.S. Antitrust System in the 1970s,

79 ANTITRUST L. J. 687, 692-704 (2014). 63 See, e.g., Jonathan Tepper, Why Regulators Went Soft on Monopolies (The American Conservative, Jan. 9, 2019),

https://perma.cc/LHR2-NH39 (“Antitrust law is not so much dormant as it is actively sabotaged by the very people

who should enforce it. The DOJ and the FTC’s policies today are best described as aggressive do-nothingism.”). 64 These efforts are described in Kovacic & Hyman, Consume or Invest, supra note 14, at 316-17; William E. Kovacic,

The Importance of History to the Design of Competition Policy Strategy: The FTC and Intellectual Property, 30

SEATTLE U. L. REV. 319 (2007) and William E. Kovacic, Measuring What Matters: The Federal Trade Commission

and Investments in Competition Policy Research and Development, 72 ANTITRUST L.J. 861 (2005).

https://perma.cc/LHR2-NH39

20

The difficulty of the FTC’s program is perhaps most apparent in the case of

health care services. The agency had to win cases before courts that displayed

skepticism about whether competition had a useful role to play in the delivery of

health care, or in any of what are known as the learned professions.65 The FTC also

had to outmaneuver an industry that was bent on gaining legislative relief from

antitrust scrutiny. Allied with other professional groups, the leading U.S. medical

societies came within an inch in the late 1970s and early 1980s of persuading

Congress to withdraw the FTC’s jurisdiction to apply the antitrust law to the

professions.66

A second example is the FTC’s effort over the past two decades to restore the

effectiveness of the “quick look” as an analytical tool in the wake of the Supreme

Court’s decision in Federal Trade Commission v. California Dental Association

(CDA).67 By 2001, it had become apparent to the FTC’s senior leadership team that

CDA had raised doubts about the application of the quick look method of analysis to

truncate the assessment of behavior that, while not previously condemned as illegal

per se, strongly resembled conduct that antitrust jurisprudence had forbidden

categorically.68 The agency responded with a strategy focused on the development

of cases that would enable the Commission to use its administrative adjudication

authority to persuade courts to reject the broader negative implications of CDA and

restore the vitality of the quick look. This initiative ultimately generated court of

appeals decisions that upheld the Commission’s effort to treat certain behavior as

“inherently suspect” without proving that the defendant possessed market power and

to require the defendant to offer cognizable, plausible justifications.69

A third example is the FTC’s successful litigation of three cases before the

Supreme Court over the past decade.70 Not since the 1960s has the Commission

litigated and won three consecutive antitrust cases before the Supreme Court. Each

matter involved difficult issues and featured strong opposition from the defendants

65 See, e.g., Am. Med. Ass’n, 94 F.T.C. 701 (1979), modified and enforced, 638 F.2d 443 (2d Cir. 1980), aff’d by an

equally divided Court, 455 U.S. 676 (1982). 66 This campaign is recounted in Kovacic, Congressional Oversight, supra note 19, at 664-67. 67 526 U.S. 756 (1999). 68 One of us (Kovacic) was the FTC’s general counsel at the time the agency was deciding how to respond to the

setback in CDA. On the significance of the quick look as an analytical device in U.S. antitrust law, see Gavil et al.,

supra note 25, at 246-58; Alison Jones & William E. Kovacic, Identifying Anticompetitive Agreements in the United

States and the European Union: Developing a Coherent Analytical Framework, 62(2) ANTITRUST BULL. 254, 273-76

(2017). 69 See North Texas Specialty Physicians v. FTC, 528 F,3d 346 (5th Cir. 2008); Polygram Holdings, Inc. v. FTC, 416

F.3d 29 (D.C. Cir. 2005). 70 FTC v Actavis, Inc, 570 U.S. 756 (2013); FTC v. Phoebe Putney Hospital System, Inc., 568 U.S. 216 (2013); North

Carolina State Board of Dental Examiners v FTC, 135 S.Ct. 1117 (2015).

21

and amici. Had the FTC been a “timid” institution, one cannot imagine that it wouild

have mounted or sustained these litigation challenges.

The programs that accounted for these results were not accidental. Each program

began with a careful examination of the existing framework of doctrine and policy

to identify desired areas of extension. This stock-taking guided the identification of

potential candidates for cases and the application of other policy making tools.71

Each program built incrementally upon the bipartisan contributions of agency

leadership and the sustained commitment of staff across several presidential

administrations headed by Democrats and Republicans.

If one assumes (as a number of reform proponents assert) that the FTC was a

useless body in the modern era, there would be little purpose in studying these

examples, or anything else it did, as there would be nothing useful to learn. The

paint-it-black interpretation of modern antitrust history makes the costly error of

tossing aside experience that might inform the successful implementation of new

reforms.

A second notable harm from the catastrophe narrative, most relevant to the

discussion of human capital, is its demoralizing effect on the agency’s existing

managers and staff. To see one’s previous work portrayed as substandard, or worse,

tends not to inspire superior effort. It breeds cynicism and distrust where managers

and staff understand that the critique badly distorts what they have done. Proponents

of basic change must realize that the success of their program to expand antitrust

intervention will require major contributions from existing staff and managers.

(iii) Capture and the Revolving Door. The modern critique of the U.S. system

often describes the federal agencies as captured by the business community or

beholden to ideas that disfavor robust intervention.72 Advocates of change suggest

that the execution of their reform program at the federal antitrust agencies will

require the appointment of senior managers and new staff who repudiate the

consumer welfare standard, or at least embrace vision for expanded enforcement

under the consumer welfare, and embrace the multidimensional conception of the

proper goals of competition law. Those already employed by the enforcement

agencies as managers and staff will be expected to accept the expanded (goals)

framework or they will find their duties reduced and their roles marginalized. New

appointees to top leadership positions will not be tainted by substantial previous

71 See e.g., Kovacic & Hyman, Consume or Invest?, supra note 14, at 316-17 (discussing development of FTC

litigation programs involving health care and pharmaceuticals|). 72 See e.g., Trustbusting in the 21st Century, ECONOMIST, Nov. 18, 2018 (stating that “competition regulators have

been captured” and criticizing U.S. revolving door that creates conflicts of interest and warped perspectives on

competition policy.

22

experience in the private sector, nor will they have spent too much time as civil

servants in a government enforcement culture that assumed the primacy of consumer

welfare as the aim of antitrust law and accepted norms that tilted toward

underenforcement. The concern about compromised motives is also likely to

disqualify many academics who, though sympathetic to some expansion of antitrust

enforcement, remain excessively beholden to some notion of a consumer (rather than

citizen) welfare standard, or have engaged in consulting on behalf of large corporate

interests.

One possible reaction to the anxiety about capture is to slam the revolving door

shut, or at least to slow the rate at which it spins. We offer two cautions about this

approach. First, the modern experience of the FTC raises reasons to question the

strength of the theory. For example, if business perspectives dominate the FTC, why

did the agency persist in its efforts to challenge reverse payment agreements

involving leading pharmaceutical producers?73 Was it because the pharmaceutical

firms weren’t as good at lobbying as, say, the information services giants? And what

explains the FTC’s decision to sue Qualcomm for monopolization early in 2017?74

Is this simply attributable to the inadequacy of Qualcomm’s Washington, D.C.

lobbyists, or is the capture explanation for the behavior of the federal antitrust

agencies not entirely airtight?

Our second caution is that severe restrictions on the revolving door could deny

the federal agencies access to skills they will need to carry out a major expansion of

antitrust enforcement. Recruiting attorneys, economists, and other specialists from

the private sector can give the agencies a vital infusion of talent which, when

combined with agency careerists, permits the creation of project teams that can equal

the capability of the best teams that the defense can mount in major litigation matters.

We also are wary of the idea that an attorney or economist coming from the private

sector will discourage effective intervention during the period of public service as a

way to pave the road to a better private sector position upon leaving the agency.

Rather, there is evidence to suggest that creating a reputation for aggressiveness and

toughness as an enforcer increases one’s post-agency employment options. More

than a few individuals have developed prosperous careers based upon piloting

businesses through navigational hazards that they helped create while they were

senior officials in public agencies.

C. Improving Capability: Agency Cooperation and Project Selection

The U.S. antitrust system is famous for its decentralization of the power to

prosecute, giving many entities – public agencies (at both the federal and state

73 See Activas, 570 U.S, 756 (2013). 74 See supra notes 26-27 and accompanying text.

23

levels), consumers, and businesses – competence to enforce the federal antitrust

laws. The federal enforcement regime also coexists with state antitrust laws and with

sectoral regulation, at the national and state levels, that include competition policy

mandates.

The extraordinary decentralization and multiplicity of enforcement mechanisms

supply valuable possibilities for experimentation and provide safeguards in case any

single enforcement agent is disabled (e.g., due to capture, resource austerity, or

corruption).75 Among public agencies, there is also the possibility that federal and

state government institutions, while preserving the benefits of experimentation and

redundancy, could improve performance through cooperation that allows them to

perform tasks collectively that each could accomplish with great difficulty, or not at

all, if they act in isolation. In the discussion below, we suggest approaches that

preserve the multiplicity of actors in the existing U.S. regime but also promise to

improve the performance of the entire system through better inter-agency

cooperation – to integrate operations more fully “by contract” rather than a formal

consolidation of functions in a smaller number of institutions.

For models of successful interagency cooperation, one might study the

successful policy integration that has taken place through the work of the United

Kingdom Competition Network and the European Competition Network. In both

examples one can see the mix of organizational structures and personal leadership

that enabled agencies collectively to accomplish policy results that would have been

unattainable through the work of single agencies operating in isolation. The United

States has no equivalent to these institutions, which have served valuable policy

formation and coordination functions abroad. The development by America’s public

competition bodies of such networks could provide a useful way to replicate the

success achieved in other jurisdictions. Other useful measures would include the

creation of a regular program of secondments in which the leading competition

offices in the United States – federal and state bodies, alike – would swap personnel

to build familiarity with the partner institutions and help create the trust and

understanding that improve cooperation.

We doubt the ambitious litigation agenda demanded in the modern reform

proposals is attainable if the public agencies adhere to traditional practices that

overlook the expansion of output and increase in quality that superior interagency

cooperation could generate. A suggested program of fuller integration would have

the following elements.

75 See David A. Hyman and William E. Kovacic, State Enforcement in a Polycentric World, B.Y.U. L REV.

(Forthcoming 2020); William E. Kovacic and David A Hyman, Competition Agency Design: What's on the Menu?, 8

EUROPEAN COMP. J. 527 (2012).

24

(i) Development of a Common Strategy. The path toward a major expansion if

the existing litigation program will require careful planning that begins with the

formulation of a joined-up strategy implemented harmoniously by the DOJ and the

FTC. The starting point for the common strategy is to map out the existing contours

of doctrine, identify the high ground for intervention that modern jurisprudence has

established, select projects to reshape doctrine and other elements of antitrust policy,

allocate them to the best-placed agency to act and avoid duplication of resources on

identical or overlapping investigations.

A second focal point in the analysis of the doctrinal status quo would be to

consider how existing precedents can be employed to build successful cases and how

doctrinal frontiers can be extended.76 An important element of this mapping exercise

is to understand why the courts have embraced more permissive standards over the

past four decades. This assessment would facilitate the preparation of effective

arguments to persuade judges to rethink elements of the doctrinal status quo. Among

other effects, we anticipate that this inquiry will reveal how perspectives beyond the

modern Chicago School have influenced judicial thinking.77 In particular, it will

demonstrate how a number of jurists have abandoned a multi-dimensional goals

framework in favor of an efficiency orientation out of concern for “administrability”

considerations posed by the modern Harvard School of Phillip Areeda and Donald

Turner. To gain the support of jurists such as Stephen Breyer (whose antitrust views

bear the mark of Areeda’s influence), it will be necessary to show that the restoration

of a new antitrust framework, or an egalitarian goals framework, would not lead to

unpredictable and inconsistent litigation outcomes as each judge sought to weigh

efficiency concerns alongside other values, such as preserving opportunities for

small enterprises to compete.78

A third element of common strategy would be lessons derived from the

examination of the agencies’ base of experience to determine what combination of

policy tools – cases, studies, rules, advocacy – offer the best means to effectuate

change in the market, and to use this experience base to design specific remedies.

Since its creation in 1890, the U.S. competition law system has generated a mass of

information about the techniques for government intervention. As explained further

76 The contributors to the “Unlocking Antitrust Enforcement Symposium” published in the Yale Law Review in 2018

suggest a number of ways in which agencies might develop effective cases within the seemingly foreboding doctrinal

framework set by the Supreme Court. See Unlocking Antitrust Enforcement, supra note 3. 77 See William E. Kovacic, The Chicago Obsession in the Interpretation of US Antitrust History, 87 CHI. L. REV. 459,

478-82 (2020). 78 In conversations we have had with some who support the restoration of the egalitarian goals framework, it appears

that efforts to reset the goals of the antitrust system will be to devise strong structural presumptions whose application

to dominant firm conduct would facilitate attainment of the pluralistic goals agenda. See, e.g., Sen. Elizabeth Warren,

“Anti-Monopoly and Competition Restoration Act” (Dec. 9, 2019). The goals would thus be achieved by applying the

presumptions rather than making each goal a factor to be considered in a rule of reason inquiry.

25

below, the government’s “big antitrust data” can be mined to shed light on what is

likely to work. For example, experience in implementing major structural remedies

pursuant to decrees in Section 2 monopolization cases and by legislation such as the

Public Utility Holding Company Act of 1935 offer important lessons about how to

design and carry out the restructuring of major business enterprises.79

The study of past experience also will reveal that it is a mistake, as part of a

reform program, to focus all of an agency’s resources on the prosecution of big cases

against big companies to the exclusion of smaller matters. The history of U.S.

Section 2 enforcement shows that small cases can make big law by establishing

doctrinal principles that support subsequent successful prosecutions of large

enterprises.80

(ii) Project Selection Methodology. Project selection is the process by which an

antitrust agency chooses the specific litigation and non-litigation initiatives it will

use to accomplish its policy aims. There is growing recognition among antitrust

authorities that improvements in the methodology of project selection can strengthen

the prospects of success for any single initiative. Adapted for the purpose of

executing a major reform program, a good project selection methodology would

pose a series of questions about every proposed initiative.81

First, what does the agency expect to achieve if the project succeeds? Will it

improve economic conditions, realign doctrine, or both? By defining anticipated

gains, the agency can better understand how many resources to commit to a specific

measure and make a better-informed decision about how much risk to accept. This

inquiry also helps focus the agency’s attention, from the earliest days of the project’s

preparation, on the design of remedies to cure apparent problems. The consideration

of benefits to be attained and the means for realizing them can lead to agency to

reflect carefully about whether the proposed project is the best way to solve the

problem at hand. In some instances, a different sequence of initiatives may provide

the best path to a solution – for example, to begin with a market study, and then bring

cases based on the learning from the study.

Second, what risks does the project pose? How will a project failure – such as a

litigation defeat – affect the market and the agency? Will the agency be able to

sustain political support for its projects, or will the targets of intervention mobilize

79 These possibilities are examined in Kovacic, Designing Antitrust Remedies, supra note 37, at 1306-10. 80 For example, the DOJ’s successful prosecution of monopolization claims against Otter Tail Power Co v. U.S., 410

U.S. 366 (1973) and Lorain Journal Co. v. U.S., 342 U.S. 243 (1951) provided key foundations for its monopolization

challenges in U.S. v. AT&T Co., 552 F.Supp 131 (D.D.C. 1982) and .U.S. v. Microsoft Corp., 253 F.3d 34 (D.C. Cir.

2001) (per curiam), respectively. 81 This framework resembles the project selection methodology developed and applied by the Competition Markets

Authority. For a more elaborate exposition of its ingredients, see William E. Kovacic, Deciding What to Do and How

to Do It: Prioritization, Project Selection, and Competition Agency Effectiveness, 13 COMP. L. REV. 9 (2018).

26

a political coalition to constrain the agency by, for example, curbing its authority or

budget? To succeed, agencies must be mindful of the shifting sands in politics and

be prepared with countermeasures to deal with situations where relevant politicians’

interests change and become more sympathetic to commercial interests. Important

issues therefore will be whether current political supporters of reform have the

staying power to back agencies for the five to ten years it might take to carry out

cases successfully, what steps agencies can take to ensure sustained political support

and to deal with swings in the political environment, and whether financial support

from the affected firms may be used to sway, or can be prevented from swaying, the

political process and buckle political resolve.

We raise this issue because, in a painful number of instances, Congress has given

unreliable policy guidance to the federal enforcement agencies. Bold cases that

endanger economic power often lead adversely affected firms to expend large sums,

through lobbying and campaign contributions, to induce legislators to restrain the

antitrust agencies. In particular, there is an unvirtuous cycle in the United States

through which Congress has demanded bold action from the FTC and then punished

the agency, or threatened to reduce its budget or powers, when the Commission

followed its guidance. The Commission has grim memories of episodes – for

example, in the late 1940s and early 1950s and in the late 1970s and early 1980s –in

which Congress berated the FTC for bringing the types of cases that powerful

legislators or committees at an earlier time had urged the agency to pursue.82 No

well-informed leader in the U.S. agencies is unaware of this unfortunate history.

Third, which agency will carry out the project? Does that agency have talent

available, or can it acquire needed talent in a timely manner, to perform the project

successfully and overcome the opposition it will face where the agency seeks strong

remedies for individual firms or entire sectors of the economy? A clear-headed

answer to these questions helps avoid the creation of large gaps between the agency’s

commitments and its ability to fulfill them in practice. Because it may be better

attuned to the agency’s capabilities, a more gradual approach to rolling out a reform

program may have better prospects for success than the launch of a number of large,

complex cases all at the same time. An agency must wary of commencing a large

number of ambitious projects at a pace that will place impossible demands on its

ability to land them successfully.

Fourth, what will the project cost be in terms of personnel and out-of-pocket

expenditures for items such as expert witnesses to support cases? This inquiry helps

the